From the 1970's to the present day, many factors have influenced the ongoing evolution of pizza
in North America. This includes factors such as the popularity of franchising, the necessity
of two sources of income to support the family household, the health food craze, and the
economic downturn of the early 90's. Franchising in general exploded in popularity. Being one
of the most popular franchising concepts, pizzerias opened at thousands of locations across
North America selling a pizza that was very similar to the traditional Neopolitan style.

Dual income families turned to the convenience of home food delivery with greater frequency
because cooking after a day's work was not always appealing. Catering to the health conscious
consumer broadened what was deemed as acceptable.

The recession also inspired a rebirth of creativity and flair in contrast to a trend towards
homogeneity. Many fine dine-in restaurants had to restructure their menu in order to broaden
their appeal and reduce prices because patrons were eating out less. The role that pizza will
play in our lives in the future is as difficult to predict as lifestyles. So many factors can
change. Imagine for a second what the impact would be if the cost of delivery becomes too high
due to the ever increasing price of insurance and gasoline. However, since both lifestyle and
pizza are intertwined, it is reasonable to assume that their related evolution will continue.

Pizza Fast Food Industry

A Major problem associated with pizza restaurants is that many would not describe pizza as fast
food. One marketing analyst describes fast food as "the notion of a customer serving himself
at a counter where food that has already been cooked in advance is offered" (Emerson, 53).
This can be the case in some pizza restaurants and not in others. There are approximately
61,269 pizzerias in the United States. As with the automobile industry, there too exists a
big three in the pizza industry. The big three (according to 1996 sales) are Pizza Hut,
Domino's Pizza, and Little Caesar's. Not too far behind is Papa John's with an estimated
1996 sales of $619.1 million. Although the big three continue to enjoy sustainable growth,
small "mom and pop" operations have faired quite respectably in this overcrowded market
segment. According to some industry analysis, independents account for 20-25% of the market.

Pizza Hut with sales of $6.5 billion in 1996 dominated the pizza market. It is by far the
largest chain with over 11,000 locations worldwide. The Dallas based chain, which was
established in 1985, has consistently led the market in terms of innovation and appeal
(Emerson, 55). New offerings such as the "Bigfoot" and chicken topped pizzas along with the
chain's first white sauce have helped it increase sales globally.

Pizza Hut is very predominant in the Midwest. They have no major competitors because the
majority of the pizza restaurants are small chains. North Carolina carries more Pizza Hut
restaurants than any other state. Countries where Pizza Hut exists include Mexico, Canada,
and many more. Canada's market has not been as good as the Australian and Mexican markets,
but that is why the restaurant chain is expanding into other countries. Frank Carney, founder
of Pizza Hut plans to expand business to West Germany, but experienced people who really know
the German market are scarce (Emerson, 56).

Domino's Pizza, a privately held company, holds the number two position with sales of $2.8
billion in 1996. This company has over 5,400 stores with about a quarter operating in other
countries. Domino's has traditionally held on to its core business of home delivery for over
35 years. In an attempt to spice up their menu, Domino's introduced a new flavored crust last
spring. The crust has increased systemwide sales 5% to 10% when it was only offered in 35% of
the system's store.

Followed by Domino's is Little Caesar's being number three in the segment. This Detroit based
chain had sales over $2 billion last year within its 4600 stores. Little Caesar's philosophy
revolves around the price of its pizza. By offering more pizza for the money, it has
increasingly established itself as a major player in the industry. Its commitment to this
philosophy has led them to expand operations into international markets such as Honduras, the
Dominican Republic, and South Korea.

Recently, Little Caesar's has revamped its menu to include such items as lasagna, salads, and
deserts. Stuffed crust pizzas were also introduced this year along with crazy breads in order
to combat similar items offered by their competitors. In an attempt to boost sales, Little
Caesar's has also entered the home delivery game because of wide consumer demand.

Although it is not in the top three, Papa John's has been able to surpass many small chains s
imilar in size in the last few years. With sales over $600 million, Papa John's has
established itself as a formidable players in the pizza segment (Darnay and Reddy, 22).
Emphasizing quality ingredients in its pizzas has helped it become the best tasting pizza
in markets around the country. Many larger chains have noticed this trend and have initiated
their own campaigns emphasizing quality.

Even though large franchises like the ones above account for a major percentage of the pizza
market, small operations such as CiCi's Pizza have done considerably well. This chain has more
than 150 restaurants in the United States with sales of $81 million (Darnay and Reddy, 23).
Instead of being known for their carryout and delivery, they are known for their $2.99 pizza
and pasta buffet. Donato's Pizza, a small restaurant chain out of Ohio, is also expanding.
They are known for their tasty dough recipe and are looking at getting a drive-thru to expand
their sales.

Referring to the pie chart in the appendix, Pizza Industry '95 Sales ($MM), it is evident that
Pizza Hut holds more than half of the pizza industry sales in 1995 by having a percentage of
54.3%. Domino's and Little Caesar's follow far behind Pizza Hut in sales with a percentage of
18.2% and 13.7%. These sales are slightly off from the 1996 sales, but the order of most sales
is still the same.

As far as pizza restaurants are distributed by region, the Mid-Atlantic holds the highest
percentage of 20.7%. Central, South Atlantic, and Pacific are the next three highest pizza
regions holding percentages of 19.1%, 15.1%, and 13.6%, respectively. This information can
be based on data from the U.S. Census Data as to which states by region have the largest number
of households. Households and population size can be a factor as to why there are more
restaurants in certain geographic regions than in others.

Demographics

According to the 1990 U.S. Census Data, the U.S. is comprised of 248,709,873 people. These
people made up 65,049,428 families and 91,993,582 households. In the four geographic sectors
of the United States, the total persons sampled in the Northeast is 50,809,216, 59,668,624 in
the Midwest, 85,445,920 in the South, and 52,786,080 in the West.

The demographic composition by Census regions varies quite a bit, but for the United States as
a whole, according to the 1990 Summary Tape File 3 Extract Report, the total number of people
in the United States is 248,709,872, 15.5% of the world population. By age groups those
persons 17 and under account for 25.6% of the U.S. population, those 18-34 make up 28%, those
35-54 make up 25.4% and those 55 and older comprise 21.0% of the population. This information
explains why consumption of pizza by some age groups is higher for others since there may be
more people in one age group than another group.

Another demographic factor that may affect pizza fast food consumption is households by type.
Households can either be held by a single person, married couples with no children, married
with children, single with children, divorced with children, or divorced without children.
Of the total percentage of households, 70.7% are family households, and 29.3% are non-family
households. According to the household income provided by the Basic Tables report from the
UMSL Urban Information Center, household income under $15,000 accounts for 24.3% of the U.S.
population. Income between $15,000-$24,999 makes up 17.5%, $25,000-$34,999 makes up 15.8%,
$35,000-$49,999 makes up 17.9%, and income of $50,000 or more makes up 24.5%.

Level of education, the last of the demographic factors is also a major factor as to determine
which specific people dine in or receive deliveries from fast food pizza restaurants. Of those
surveyed being 25 and above, 14.4% had education between 9th and 12th grade with no diploma,
30.0% were high school graduates or equivalent, 18.7% had some college with no degree, 19.3%
had a bachelor's degree, and 7.2% had a graduate or professional degree.

All of the demographic trends listed above favor the pizza fast food restaurant industry.
The portion of consumer's food dollars that are spent at restaurants has increased due to these
demographic trends. Due to changes in the American family, the pool of those likely to eat out
has expanded. The largest change occurred with married women who worked outside of the home.
Usually the married working woman has less time to cook at home, so the extra income she earns
goes toward the purchase of her household being able to eat out (Restaurants, 7). According
to the U.S. Bureau of Labor Statistics, as of January 1997, 60.4% of women over the age of 20
were part of the labor force. "The U.S. Bureau estimates continued gains to 62.6% by the year
2005" (Restaurants, 12). Because of the preceding data, it is likely that eating out will
probably increase more in the future.

On the average, restaurant spending in 1996 approximated about $2,400 for each household in
the U.S. which accounted for a total of about $238 billion dollars. According to the Bureau
of Labor Statistics Data, higher income households accounted for 26.4% of total spending on
food away from home in 1994, despite constituting only 11.7% of U.S. households. Generation
X'ers eat out more often at pizza fast food restaurants, but when baby boomers choose to dine
out, they have to spend more according to the National Restaurant Association analysis of the
BLS Consumer Expenditure Survey in 1994. This survey also stated that the typical U.S.
household spent nearly $600 per person for fast food pizza.

Consumption in the Pizza Fast Food Industry

Today, the average American eats 46 slices of pizza per year (about 23 pounds). Buck Jones
reports "The business is only expected to grow as the industry continues to expand its product
base and revenue earnings through imaginative recipes and creative marketing concepts"
(Jones, 177). Pizza producers are searching for additional pizza products that will appeal
to new markets such as the croissant, french bread, and other specialty products showing up
today. Most new pizza products are marketed to adult consumers. Adults are targeted because
they make up the majority of the lunch crowd and when they take their families out to dinner.

Pizza consumption has many different consumers: professional people during lunch, single parent
families, two income families, children, high school/college age kids, singles, and more
specifically, bachelors. As consumers age, their desire for pizza declines as noted by the
survey. Women are generally targeted by pizza chains because they are usually the providers
of meals for their families.

Currently, pizza carryout represents 46% of all pizza transactions, and home and office
delivery account for 26% of delivery. During the week however, Friday through Sunday account
for 59% of pizza sales (R&I, 88). On average, individual pizza sales are on the rise while
the portions sold remain the same. Pizza comes in many different crusts and is sold in the
following percentages: regular pizza 56.8% of pizza sold, deep dish or pan pizza 17.5%, thick
crust 11.0%, and extra-thin pizza 8.5%. Overall, beverages were not purchased 52.9% of the
time and carbonated drinks were the majority sold with 31.1%. Salad bars are surprisingly
only seen in 3.3% of pizza sales. Pizza consumption changes with new product innovation and
advertising. Presently, Pizza Hut is advertising its new "Italian chicken pizza" and "Chicken
Supreme", the first white sauce pizzas promoted in the industry. These new pizzas were
created in response to the following research data by Research 1000 "Better than 80% of the
over 50 market eats takeout food at least once a month. Their favorite? Chicken" (R&I, 14).
Chicken pizzas are extremely new to the industry and competitors are targeting new markets
through their invention. These new products will expand the current pizza markets and increase
the average consumption of current pizza users with their new product innovation.

Pizza product consumption has recently ventured into the breakfast consumer market to capture
new sales. Breakfast pizzas are a new interesting product of Genuardi's Family Market. They
currently produce apple, cinnamon, cherry, and scrambled egg/bacon pizzas (Partridge, 101).
Their innovation has increased consumption of pizza product by targeting a brand new target
market: the breakfast consumer. Pizza Hut has been approached with requests for a "breakfast
daypart" and is now in the designing stages of its "Panwich" breakfast sandwich, which comes
in four varieties made of folded pizza dough. In addition to their current lunch and dinner
sales, there is a potential for increased revenues through competing in the fast food breakfast
industry.

Pizza toppings vary geographically based on current trends within a geographic region.
Squid is Japan's most popular pizza topping and tuna and corn rank high in England followed
by Australia's affinity for eggs as a pizza topping. The introduction of new pizza toppings
has and will continue to be an avenue for increased revenues.

Consumers are becoming more drawn to natural ingredients, natural restaurant environments,
openness in food preparation, and the need to experience the food ethnically. Presently,
newer competitors in the pizza arena are using wood-burning pizza ovens such as Macaroni Bar
and Grill, Mario's, and Carraba's. Consumers also prefer an open view of the pizza-making
process.

Pizza consumption has also increased through the distribution of direct mail coupons both
locally and globally (R&I, 88). These coupons amounted to a 12% increase for pizza chain
sales in 1996. Cici's Pizza is presently the pizza segments value leader with their $2.99
adult buffet ($1.99 for kids).

Many grocery retailers feel inadequately equipped to compete with the major pizza chains and
therefore decide to just offer the products demanded. Most retail operators have identified
two markets and have created two different product lines for the high quality pizza connoisseur
and the price conscious consumer.

Another new market in the pizza industry is the selling of raw pizzas. Consumers call in
and specify the pizza toppings they wish for their pizza at Papa Murphy's. The consumer pays
for the convenience of having someone else prepare their pizza and they get to eat it in the
privacy of their own home.

Future Consumption Trends

Consumption is expected to increase in the future due to increases in population and consumers
lack of time to prepare their own meals.

The pizza industry will continue to expand globally and tap into new pizza markets. This
growth will spur on new changes in adapting their pizza product to their environment. Round
Table Pizza is the nation's fourth largest pizza chain and has 500 restaurants in the Western
U.S. and internationally in six Asian countries and the Middle East (Round Table Pizza website,
1). They pride themselves on being ethnically diverse. Observers of the pizza industry note
that the "hot area of development" over the next decade will be the Pacific Rim, Latin America,
and the Caribbean. The tastes of the younger international generation are changing more and
more to that of the western culture. "When a class of fifth graders in Korea were asked,
"What's your favorite food?", the most common responses were pizza, hamburgers, and/or fried
chicken" (Coeyman, 24). Korea's oldest fast-food restaurant, Pizza Hut, has outstanding sales
of $113 million for 1995. Pizza Hut specifically developed the "bulgogi" pizza for the Korean
market. This is a clear example that U.S. companies have great potential in the global market
and this can be achieved through adapted or standardized products, depending on the product
and its industry.

Consumption is also going to move toward more natural, fresh, and healthier pizza products.
A shift is under way in the industry away from product novelty to high quality ingredients
and an emphasis on taste. Round Table Pizza promotes their "Honest Pizza" made from dough
mixed from scratch, freshly grated cheese, and new sauce. Round Table Pizza also created
the "Salute Veggie", a pizza piled high with three different cheeses and various vegetables.
The "Salute Veggie" reaches out to the vegetarian consumer who may have previously shied away
from the pizza industry due to the meat content. In response to Papa John's fresher pizza
promotions, Pizza Hut has reformulated its entire line, now including more toppings, thicker
sauce, and a crunchier crust.

Consumption will also increase through the addition of smaller pizza stores/stands that sell
pizza by the slice. Although these are smaller sales transactions, they are on the rise as
proven by Genuardi's Family Market sales, which 75% of its sales are sold by the slice.
Smaller Pizza Hut units are being placed inside Stop n' Go stores that reach out directly
to the consumer on the go. These locations bring the product directly to the consumer they
are targeting.

There are also indicators for more concern over health. As consumers age, there is an
increased interest in exercise and eating healthier. This is also a new trend of the 1990's
to be "body conscious." The pizza industry needs to continue its research and development in
its product's affects on health. Such efforts are seen through Round Table Pizzas new "Salute
Veggie" pizza, which contains only tomato sauce and vegetables. This pizza has no meat
content and is therefore better for consumers concerned with high cholesterol and blood
pressure. Over the next 10 to 20 years, there will be an increased emphasis on eating
healthy. While pizza industry chains need to continue to offer their current products
to maintain their revenues, they need to look ahead and modify their products toward future
trends.

On average, there lies the common belief that pizza consumption will increase as a consumer
gets married and has children. This is rationalized through decreased time allowed to prepare
meals with a family and a desire for easy meals that save time. Another factor is that
children on the average like pizza. When an individual thinks of pizza, one conjures up
thoughts of a late night at the office, slumber parties, quick lunch meal, "pizza parties"
during the workday in an office, and children's pizza parlors like Chuck E. Cheese. Pizza
generally summons feeling of "happiness" or "fun" and is also viewed as a "really quick meal."
This is a major advantage for pizza chain retailers in that not many foods carry such
ideologies or feelings. These connotations generally have to be marketed much like Chuck E.
Cheese (fun & pizza) or Dominos (quick and delivered to your door).

Over the next 5 to 10 years, there will be increases in consumption as a result of more single
parent families and two income families. There will be an increase in the amount of women
working to support their families and this will add to the need for easy to prepare or fast
meals. As single parents continue to work, attend night school, and raise their children
they will continue to utilize pizza delivery services to compensate for their lack of time
to prepare their children dinner.

As the population increases, there will be significant increases in high school and college
age kids that order pizza. Another relationship pizza has is with beer. It is very common
for students to get their buddies and order pizza to eat while drinking their beer both while
studying or partying. Pizza chains should further investigate marketing their products in
establishments that serve beer. Retailers could target clubs and sports bars to increase
their market share.

As consumers go about their daily tasks another market lies in drive-thru pizza restaurants.
As people go about their day, pizza chain retailers could better serve some of its customers
through drive-thru services. Over time, consumers will remain as busy as they are now and
maybe even more so, some consumers could utilize these quick service establishments that
allow them to enjoy pizza without having to stop to eat it.

In an effort to predict future trends more accurately, many pizza purveyors are upgrading
their MIS and POS information systems with the linking of unit-level equipment to multi-task
networks that can "streamline data gathering, poll sales, and inventory details centrally,
create customer databases and enable sophisticated phone-order systems" (Carlino, 2). Sixty
one percent of pizza chain operators currently have some form of computerized system, and
another 14.6% plan to buy a computer within a year. These highly technical systems will allow
pizza chains to analyze their consumers preferences and daily usage of their products. This
information combined with other data collected will allow the industry as a whole to predict
the future of the fast food pizza industry.

Primary Data Analysis

The results of our survey:

From our questionnaire, we found that 53.75% of the sample population had pizza delivery once a month.

There are about 51.25% of the sample population that have been using dine-in service once a month.

According to our survey, 70% of the sample population had pizza for dinner.

There are around 37.5% of the sample population that preferred Pizza Hut to any other establishment.

About 65% of the sample population required delivery for their pizza.

About 50% of the sample population spends around $11.00-$15.99 on their pizza purchase.

According the survey, 57.5% of the sample population said the taste of pizza is good while 31.25% of the sample population said the taste of pizza was excellent.

About 46.25% of the sample population think that the price of pizza is fair.

About 38.75% of the sample population think that convenient location is quite important in their decision in choosing a restaurant.

In their decision for their next pizza purchase, 47.5% of the sample population believe that attractive prices are a very important factor.

About 63.75% of the sample population believe that the quality of food is a very important in their decision in choosing a restaurant.

About 42.5% of the sample population said they were satisfied with their last pizza purchase.

Concerning the speed of delivery, around 40% of the sample population said they were satisfied while 35% of the sample population said they were somewhat satisfied.

About 30% of the sample population said they agree somewhat with the statement concerning health consciousness. The same percentage of the sample population said they neither agree nor disagree with the statement.

About 50% of the sample population said they were extremely likely to purchase their pizza from that same pizza establishment.

About 37.5% of the sample population agree somewhat that they eat fast food frequently.

About 28.75% of the sample population agree somewhat that they have little time to prepare meals for themselves while 27.5% of the sample population completely agree with the statement.

Approximately 51.25% of the sample population strongly preferred home-cooked meals to fast food.

Concerning pizza consumption in the next five years, 61.25% of the sample population said it would remain about the same.

About 28.75% of the sample population believe that the price of pizza will need to change in the next five years.

Concerning demographics, 58.75% of the sample population were female while 41.25% were male.

About 30% of the sample population were married without children.

About 30% of the sample population said they had household incomes before taxes of $50,000 or more.

Approximately 35% of the sample population had some college while 32.5% had a college degree.

Analysis and Interpretation of Data

According to our data and further analysis using cross-tabulations, we found that the results
coincided with the secondary data. Demographic factors such as household incomes and education
level, and individuals in the household were representative of the larger population.

The household income before taxes in our survey was similar to the U.S. population. In our
survey, 30% of the sample population had household incomes before taxes of $50,000 or more.
Likewise, according to the Basic Tables report from the UMSL Urban Information Center,
household incomes of $50,000 or more accounted for 24.5% of the U.S. population. The figures
were also similar for the income brackets of $35,000-$49,999 and $25,000-$34,999. While our
figures were slightly higher than the Basic Tables of 1990, the increase is probably due to
the higher wages of professionals and also the trend towards dual-income households. Moreover,
children in households may have reached the employment age thus adding to the overall household
income. Also, inflation has been kept to a minimum during the past 4-5 years resulting in an
overall gain in household income.

Education level, according to our survey, was much higher for people with college degrees than
the Basic Tables in 1990. According to the tables, 19.3% of the population had a college
degree while our survey data indicated that 32.50% of the sample population had a degree.
Again, discrepancies in the results are partly due to out-dated information from the Basic
Tables. As a result, the higher percentage indicates that more people are going to college
and graduating thus affecting overall restaurant expenditures. For instance, the result of
more college graduates increases the overall work force of the U.S. population relative to
their income. As graduates move into the workforce, their time and energy expended at work
will force them to alternative means of preparing meals. Thus, overall expenditures in
dining-out will increase due to the limited time and energy they have in preparing their
own meals. Moreover, deliveries of pizza or any other meal will likely increase since they
have limited time available to dine-in.

The number of individuals in the household is also a great indicator of consumption. In our
survey, 30% of the sample population had 2 individuals in their household. Approximately
22.5% of the sample population had three or four individuals in the household. From these
results, we believe that since the mean of the sample population was 2.875, consumption on
food can be determined by the size of the household. For example, households that have many
individuals will be more susceptible in the consumption of the fast food since the trend of
the dual-income house has been predominant in society, cooking for others or oneself is
inconvenient.

In our cross-tabulation calculations, we analyzed on the following factors: age vs.
dining-in, age vs. delivery, price vs. dining-in, health consciousness vs. pizza consumption
in next five years, price vs. next purchase, individuals in household vs. delivery, and
individuals in household vs. dining-in. The tables can be found in the appendix along with
the graphs.

In the age vs. delivery table, our calculations indicated that 60.0% of the people under the
age of 20 had pizza delivered to them at least once a month. Also, people over the age of 56
were more likely to have pizza delivered to them. This is not surprising since people in this
age bracket are either unable to drive or do not like to drive. Furthermore, people in the
age brackets of 21-35 and 36-55 were about the same for each category in consideration of
dining-in vs. delivery. This may be due to the fact that some households may have children
and dining out would be troublesome for them. In contrast, people who like to dine-in for
this age bracket might do it for the social and business aspect of the experience.

In the health consciousness vs. pizza consumption in the next five years table, 34.69% of the
sample population said they agree somewhat with the statement that they are health conscious
and that their consumption would stay about the same for the next five years. Although only
2 people in the sample population completely agree with the statement and said that their
consumption would increase, we believe pizza consumption would increase if the nutrition of
pizza were improved. Consequently, this coincides with the trend that pizza establishments
have implemented in recent years. For example, the development of veggie pizzas have catered
to vegetarians that have limited time in preparing meals and also for variety in their daily
food consumption.

In respect to individuals in the household vs. delivery and individuals in the household vs.
dining-in, 42.5% of the sample population that said they had between two and four individuals
in the household and that ordered pizza at least once a month were more likely to have it
delivered. Similarly, the majority of households with two to four individuals were more
likely to dine-in. These factors can be attributed to the fact that households with more
people usually spend more on food outside the home. This is the area in which pizza
establishments can capitalize on to increase sales. For example, they could offer family
meal packages or value meals customized to larger families. Furthermore, they could promote
family nights on slow business days in their restaurants in order to increase dine-in sales.

In conclusion, the pizza industry is a very dynamic market. Predicting trends in order to
suit the tastes of the consumer is a never-ending process. Pizza establishments need to be
aware of demographic factors such as income, education level, and household size. Equally
important is the lifestyle of the consumer. For example, in our data, 70% of the sample
population had pizza for dinner. What the pizza establishment needs to do is to create new
cultural awareness in order to remove the stigma that pizza is not "fast" food. But doing
this can create another problem. Consequently, this is why the pizza industry or for that
matter, any industry, needs to rely on marketing research.